Ethical Economics

The 'environmental crisis' has happened because the human household or economy is in conflict at almost every point with the household of nature - Wendell Berry

We need new economic models for the 21st Century and future generations. We must combine enterprise with wisdom and common sense if humans are to survive on this planet.

True Cost Clearinghouse Here you will find articles and reports documenting the economic, health, and social costs of pollution, worker exposures, and resource exploitation, as well as the underreported benefits of remediation and precautionary policies.

Both quantitative economic analyses and qualitative value analyses are included, but our emphasis is on cost of pollution rather than resource valuation.

See LINKS for more information on resource valuation and other helpful organizations and resources.

The Owl Economy The old bull-and-bear economy is bankrupting the planet. Maybe our icon should be the owl. What would an owl economy look like?

The owl economy would be green, fair, and diversified. It would emphasize the long-term bottom line—prosperity now that can be carried into the future. It would measure wealth by the wellbeing of communities as well as individuals. It would grow social and natural capital as well as material capital. It would be grounded in the biological reality of a generous but limited planet. It would protect, restore, and enrich the commons—air, water, soil, wildlife and lands, and the shared wealth of human knowledge, cooperation, and infrastructure. Its goals would be to create jobs and beauty.

The rapid expansion of operations to extract natural gas from coalbeds, currently planned in Southeast Montana and Northern Wyoming, is a risky venture. The risks involved in tapping this new energy source will fall on the public, not the energy companies who do the drilling.

The largest risk is depleting groundwater in this semi-arid region. Water wasted in the drilling could be worth up to $10.1 billion dollars in current market value.

No mechanisms currently in place will compensate for either the known public costs or the huge risks to the region's society and economy.

Oil and gas companies will pull out gas over the next 15-20 years. In exchange, states will receive a temporary boost in tax revenues. But residents will lose rangeland, cropland and tourism based on the area's pristine beauty. The region could be permanently scarred by an industrial operation that will bring tens of thousands of new methane wells into a section of Northern Wyoming and Southeastern Montana.

As much as 11 trillion gallons of water could be lost, enough to meet the household needs of all the current residents in both states of Wyoming and Montana for 150 years, if current expansion plans are carried out. Water is lost when it is pumped to the surface in order to release methane gas that is trapped underground. Up to 5,000 private groundwater wells could go dry and require deepening as the water table drops up to 600 feet in CBM extraction regions.

Coalbed methane expansion and subsequent dewatering of semi-arid Northern Wyoming and Southeast Montana, where ground water is central to farming and ranching communities, will greatly exacerbate water supply and growth problems. According to the U.S. Department of the Interior, the Powder and Tongue River Basins, which already experience water supply problems, could see as much as a 36% population increase by the year 2025, significantly adding to water shortages.

Public subsidies, no accountability People living in Wyoming and Montana have little recourse to stop this destruction because oil and gas companies from outside the regions, with no vested interest in the health of the region's economy, people, or ecosystems, have been given almost complete control of most aspects of the mining process by the federal government. Energy companies operating in the Powder River Basin take advantage of a combination of large subsidies, tax incentives and exemptions from environmental laws and public review requirements. Over the next five years, federal tax breaks for these oil and gas companies operating in the Powder River Basin alone could range from $700 million to $1.7 billion.

As of May 2003, there were 11,238 wells in the Powder River Basin. Under the current plan, the number of CBM wells is projected to climb to 77,000 within the next ten years. If half of these wells become eligible for pending tax credits, the subsidy received by oil and gas drillers would exceed $300 million per year.

A fair shake for the people of Montana and Wyoming Public subsidies to destructive activities constitute gross mismanagement of resources that are intended for the good of all. Is state and federal support for CBM a violation of the public trust?Easy Money, Hidden Costs describes avenues for assuring that the public good is served and that the total public welfare is enhanced rather than diminished.

The first section of the report outlines the requirements of sound economic analysis and introduces the tenets of the precautionary principle—assigning full value to human health and the environment, taking uncertainty into account and describing full costs and harms. Details of CBM expansion plans are presented, along with analysis of known and unknown costs, risks, and benefits.

Findings are summarized in tables presenting qualitative costs, risks, and benefits of CBM drilling over time. These tables demonstrate that benefits are weighted heavily to energy companies and occur in the short term, while costs and risks are distributed over a longer term and accrue to the public.

Toward a Sound Energy Policy The second section describes two financial tools, damage agreements and assurance bonding, that might address some of the problems brought by the large and long-term risks of CBM drilling and the unfair distribution of these risks.

A certain number of damage agreements have been negotiated but these are limited in scope, and landowners often have little bargaining power.

Assurance bonding could provide a more comprehensive solution. Environmental assurance bonds would shift the burdens of risk and responsibility onto those who gain from the activities that carry the risk--an essential corollary of the precautionary principle.

Developing and applying this tool would require considerable courage and determination on the part of public officials dedicated to upholding their responsibilities as public trustees. Wyoming Governor Dave Freudenthal's proposed coalbed methane contingency fund to compensate for unforeseen damages is a form of assurance bond. The proposed $50 million fund would have been too small to address the real needs, and it was quickly tabled in the face of industry opposition, but the idea was sound. Implementing it would require strong public support for officials willing to use such tools to protect the public trust.

The report concludes by placing coalbed methane in the larger context of national energy and water policies. Coalbed methane development poses a choice between natural gas and water, two resources of enormous practical and symbolic importance. The fossil fuel represents the U.S. economy's previous foundations and the problems it has created, while water represents both our enduring basic needs and humanity's emerging challenges.

Appendix A lists the major corporate, government, and NGO actors in coalbed methane development and assembles information that may be helpful in holding the CBM private sector accountable to the public good. In addition to the state departments of environmental quality and boards of oil and gas, the report acknowledges the governors' responsibilities. Since most of the agencies involved in regulating various aspects of CBM development have assiduously avoided responsibility for the processes as a whole, constituents should call upon chief executives of the respective states to become involved.

Do you feel called to stand for Future Generations? Do you believe the health of our bodies is intimately tied to the health of our communities, ecosystems, and our political systems? Join with SEHN and become part of our community working for lasting, systemic change. Your gift is vital to continuing this work, and we are so grateful for your support.